The capital markets regulator Securities Exchange Board of India (Sebi) has issued instructions to enable credit rating agencies to undertake the rating of financial instruments in International Financial Services Centre (IFSC) – GIFT (Gujarat International Finance Tec-City) or GIFT City.
In order to make this happen, Sebi has added International Financial Services Centres Authority (IFSCA) to the list of financial sector regulators, which is given in the master circular for CRAs dated May 16, 2024.
It is noteworthy that credit rating agencies tend to undertake the rating of financial instruments according to the guidelines framed by different financial sector regulators.
With IFSCA being added to this list of regulators, the rating activities will be carried out in the IFSC-GIFT city as well. These instructions were issued via a Sebi circular dated July 19, 2024.
This Sebi circular lists the following provisions with regards to the credit rating agencies under IFSCA:
1. If there is an issue arising from the activities of such agencies in the IFSC, it will be dealt with by IFSCA under section 12 and 13 of IFSCA Act.
2. If there are complaints, enforcement actions, and furnishing information to third parties including statutory or judicial bodies with regards to the services provided by the CRAs in the IFSC, it will the responsibility of IFSCA to deal with them.
Meanwhile, the Sebi circular specifies that the ratings undertaken by a CRA under the guidelines of IFSCA will be under the purview of IFSCA only.
Regulator for ESG rating providers
Likewise, Sebi has issued another similar circular with regards to IFSCA which enables ESG rating providers (ERPs) to undertake ESG rating activities.
For this, Sebi has issued instructions adding IFSCA to the list of financial sector regulators that are listed in the master circular for ERPs.
The Sebi circular, however, categorically mentions that the ESG ratings undertaken by an ERP under the guidelines of IFSCA will be under the purview of IFSCA only.
Meanwhile, in another news, Reserve Bank of India recently allowed resident Indians to open foreign currency accounts in GIFT City.